Human Resource Management: Effective Tool for Organizational Efficiency and Financial Management

Abstract

With the advancement of information technology and the drastic changes in the overall approach with which organizations are run, the shift in the focus from cost reduction to cost optimization is inevitable. It is evident from many of the recently conducted studies that those who are policy makers or implementers often mix cost reduction approach with the cost optimization approach. Wherever costs are to be incurred, they are often incurred. Also, the categorization of the costs to be kept under consistent surveillance also gets wrongly done many a times. As a result, financial management of the entire organization remains at stake. Out of the several avenues of effective financial management, carefully devised human resource management practices remain the crucial one.

In today's world, human resource management practices and related procedures are increasingly becoming an essential part of the considerable growth of a firm. It can play an efficient role in the overall management of the organization. One of the most commonly adopted business models in terms of set up are Micro-, Small-, and Medium-sized Enterprises (MSMEs). In order to attain effective and efficient management of the MSMEs and to attain the sustainability for MSMEs, application of appropriate Human Resource Management system is essential.

In this research, researchers aim to shed some light on the importance of human resource management practices and their potential effect on the financial management of the MSMEs. There are probable adverse effects of inefficient human resource management practices on the financial management of firms. This research is further intended to highlight how MSMEs can improve further with the help of appropriate human resource management systems.